To support prompt actions on take-back solutions, governments can offer take-back incentives to manufacturers or retailers under a given collection target to minimise environmental pollution, whether the take-back systems are required or voluntary. With an incentivising approach, studies identify that manufacturers will act to increase the number of returned products through investments responding to governmental offers. By controlling the collection rate appropriately, the manufacturers can achieve production and inventory levels that can be managed economically, and minimum total costs can be achieved. Challenges are typically addressed using industry 4.0-related technology and planning and scheduling methods. Take-back incentives provided by the government are proven to be an effective policy to increase product reuse. However, in the case of HFOs, the economic incentive must be determined. If there are no incentives for customers (both business-to-consumer (B2C) and business-to-business (B2B)) to return HFO substances (whether it be penalties, subsidies, or other rewards), they will be less likely to assist in the increase of collection, recycling and disposal. In some cases, where handing in containers with HFOs is associated with costs, it might be cheaper for the practitioner to simply ‘free’ the superfluous gas, as this is an ‘efficient’ way to free the container. To what extent such practices are used in the Nordics is unclear. However, such practices are an intentional release of gas, which is prohibited according to the EU F-gas regulation.
Implementing take-back solutions, regardless of the product, will require manufacturers to invest money to increase the product return rate. The investments will be compensated through material cost savings long-term, which will further increase the incentive for take-back systems. However, optimal economic configurations for take-back systems often rely on efficient closed-loop supply chain systems, where the collaborative action of all members engaged in the system is necessary. Ensuring assistance with the facilitation of new supply chain configurations and facilitating an increased understanding of the overall potential benefits of take-back systems for HFO substances from an economic point of view (whether it is based on penalties or rewards) would likely increase the willingness to participate among manufacturers and retailers.
13.1.2 Deposit-Refund Systems
Deposit-refund systems combine product taxation with a rebate when the product or its packaging is returned for recycling or appropriate disposal. This is usually done by applying a tax per unit of product sales with a subsidy per unit returned for recycling. The deposit-refund approach can address many environmental challenges beyond waste disposal by imposing an up-front fee on production or consumption, using the fee revenues to rebate ‘green’ inputs and mitigation activities. Deposit-refund systems go beyond bottle-collection and recycling schemes and have been established for lead-acid batteries, motor oil, tires, various hazardous materials, electronics, etc. The deposit-refund scheme can address air and water pollution caused by illegally dumping hazardous waste materials or non-point source pollution. Further, evading taxation is difficult when applied to production or consumption activities. Deposit-refund systems can generally be applied in two ways:
Downstream deposit-refund systems, where the consumers returning the materials to collection centres are paid the refund. Downstream deposit-refund systems have been shown to transform non-recyclers into diligent recyclers;
Upstream deposit-refund systems, where the refund is paid to collectors or directly to re-processors. The upstream approach is considered the most innovative, as these systems are likely to have lower transaction costs and may be less inclined to lead to situations where materials are collected for recycling but are not actually recycled.
Downstream deposit-refund systems are mostly relevant for products out of the B2C market due to the incentive mechanisms whereby consumers are rewarded for product return and circular behaviour.
On the other hand, upstream deposit-refund systems are relevant for B2B and B2G markets, but will often require additional policy measures or incentive structures to ensure increased waste collection. A combination of take-back solutions and upstream deposit-refund systems could enable the desired incentive, as retailers are put in the role of collectors and manufacturers as re-processors. Retailers and manufacturers are incentivised by regulatory requirements on take-back efforts and rewarded with refunds when collecting or recycling/properly disposing of the substance in question.
13.1.3 Developing an EPR Scheme
There is a wide range of aspects to consider when it comes to designing and developing an EPR scheme, hereunder take-back solutions and deposit-refund systems. In developing EPR schemes, all the products covered by an EPR scheme must be clearly defined to ensure the best options for compliance. Product definitions should include the following:
In the case of the included HFO-containing product groups, it would beneficially clarify all product types covered by the EPR, differentiate products into subcategories based on the type of gas utilised for coolant (including natural alternatives), materials not related to HFO gases in the EPR covered products, and the consumer type.
To ensure that EPR schemes reflect the reality of a given society and ensure a general understanding of responsibilities among EPR-affected producers, it is essential to organise a dialogue with involved and co-responsible stakeholders. The following should be taken into consideration:
As HFOs come from different manufacturing sectors and are oriented towards different consumer markets, multiple EPR schemes should be developed based on the product type. This would ease the stakeholder dialogues, as different sectors likely would have differentiating concerns with implementation of EPR schemes.
EPR involves a shift in responsibility (administrative, financial, and/or psychical) from governments or municipalities to producers or Producer Responsibility Organisations (PROs). From a polluters-pays perspective, the definition and role of the polluters (i.e. consumers) shift from an individual directly causing pollution to an economic agent (producers) in EPR schemes, playing a decisive role in reducing pollution. The shift in responsibilities is commonly facilitated through individual compliance schemes or Individual Producer Responsibility (ICS/IPR) or collective compliance schemes or Collective Producer Responsibility (CCS). ICSs/IPRs are a rare approach in the EU and are limited to instances where one producer sells its products to a limited number of users. CCSs/CPRs are much more common than individual schemes and are organised by specific organisations (PROs) that take responsibility for waste collection and treatment on behalf of their members and implement EPR principles. PROs’ responsibility perimeter differs based on the type of waste producers. Often, there is a relevance in distinguishing between household, commercial and industrial waste. CPRs tend to be more efficient regarding waste collection and treatment and cost-effective due to pooled resources, economies of scale, etc. If EPR schemes target total products (all components) or multiple product groups, CCSs or CPRs would be the most suited, as PROs would be able to facilitate proper collection, separation and recycling/disposal of all materials.
The costs of waste management, collection, and treatment of the products covered by an EPR scheme should be covered. In the case of IPR, it is recommended that standard contracts and fee calculation guidelines are set out to ensure fair and equal treatment of the producers. In the case of CPR, PROs should ideally set fees to cover the entire net waste management costs for the products included in the EPR scheme. Any revenue from sales of secondary raw materials or reusable products, both in the case of IPR and CPR, should be subtracted from the costs paid by the producers.
Fees may include a fixed element, e.g., a producer membership fee, typically paid annually.
If appropriate, product-related fees should be established per product, category, subcategories, and/or material. With this approach, a fee can be paid annually based on the number of products a producer places on the market.
Fees can also be modulated based on specific product features, such as recyclability, hazardousness, utilisation of renewable resources, etc. EPR schemes that target product characteristics directly provide the most directive incentives for eco-design increments.
Obligations placed on producers should be clearly defined to ensure the best options for compliance. The clarification of obligations can be made, utilising a variety of approaches:
Producers can be obliged to finance the current waste management system based on an average cost, KPIs, and production output. Cost determination can be based on national, regional, or local waste management costs. Alternatively, producers can be obliged to set up waste management contracts with the regional or municipal waste manager. Contract templates can be developed to ensure easy compliance and implementation.
The partial organisational approach, whereunder regional or municipal organisations still are responsible for waste collection, but with financial support from the producers. In some cases, this approach further obliges producers to participate in or facilitate waste activities such as the sorting and selling of secondary raw materials.
The full organisational approach obliges producers to take responsibility for waste collection and treatment. This is typically done with direct contracts with waste operators, and the producers keep ownership of the waste and, thereby, any recyclable secondary raw materials.